L.A. Housing Construction Slows Sharply in Q1 2025
- According to a new report by research firm Hilgard Analytics for LA City
- Only 1,325 housing permits were issued in Q1 2025, a 57% drop compared to the same period in 2024
- This decline follows an existing trend: permits had already dropped 23% in 2024 vs. 2023
- Key reasons for the slowdown include:
- High interest rates
- Economic uncertainty
- New tariffs
- Measure ULA (the “mansion tax”)
- Disruptions from January wildfires
- Most impacted areas: West & Northeast San Fernando Valley, and South L.A
- Data excludes ADUs and focuses on single-family and multifamily permits
Why It Matters
- Housing affordability could worsen as fewer homes are built, putting pressure on supply, prices, and rents
- According to economists, “If we aren’t building now, we’re locking in higher prices and rents in the future.”
- City budget at risk: With a nearly $1B deficit, reduced development may limit future tax revenue
What This Means for Buyers and Sellers
- Los Angeles real estate remains a resilient, long-term investment. Despite short-term market challenges, the fundamentals point to continued value growth over time
- For Buyers:
- With fewer new homes being built and demand remaining strong, purchasing now offers the opportunity to secure a property before prices and competition rise even further
- For Sellers:
- Limited inventory puts sellers in a strong position, with well-presented homes continuing to attract premium prices in prime areas.
